Action allows recovery of payments to day care scams

By Patrick Marley of the Journal Sentinel

Published on: 10/20/2009

Madison - A bill that would allow the state to recover improper payments from the Wisconsin Shares program - by holding child-care owners and officers personally liable - passed the Legislature without opposition Tuesday.

The state can't now recover improper payments to operations that go out of business, even when they've been shuttered by regulators.

Both the Senate and Assembly passed the bill on voice votes; it now goes to Gov. Jim Doyle, who has signaled he would sign it.

Also Tuesday, an Assembly committee unanimously passed a sweeping bill to crack down on other problems in the $350 million taxpayer-funded program, which is intended to subsidize child care for poor people so they can work. That bill would require more frequent background checks; bar people guilty of child abuse and other serious crimes from being providers; and give whistleblower protection to public employees who report fraud.

The Journal Sentinel's yearlong "Cashing in on Kids" series has exposed myriad troubles in the program while finding more than $5.7 million in suspicious payments to providers.

In recent weeks, the state responded to the reports by shutting down 99 providers it says cheated the system or violated program rules.

In some cases, the state has discovered providers were improperly paid but hasn't been able to recover the money because the providers have gone out of business after the problem was discovered. State officials, for example, were unable to recover $850,000 from Tender Moments Child Care in Milwaukee after shutting it down.

The bill passed by the Legislature would allow the state to go after business owners and officers for that money in future cases.

Such a law would help the state recover money from people like Latasha Jackson of Menomonee Falls, who received nearly $3 million in public money while authorities disregarded evidence that she had defrauded the system. The state shut down her facility this summer when it learned the Journal Sentinel was writing about her; Jackson turned herself in a day after being confronted by a reporter.

Assembly leaders said the bill was a key reform but said more steps need to be taken.

"At a time when resources are stretched thin, we have zero tolerance for those who abuse state aid programs," Assembly Speaker Mike Sheridan (D-Janesville) said in a statement.

Democrats who control the Assembly wanted to pass the second Wisconsin Shares bill Tuesday but decided to wait until next week after Republicans said they wanted to add amendments to it.

One amendment proposed by Rep. Mark Gundrum (R-New Berlin) and Sen. Alberta Darling (R-River Hills) would require state and county workers to report suspected fraud in the program to district attorneys' offices.

In interviews with eight current or former government workers, six told the Journal Sentinel they had been punished for aggressively pursuing suspicious child-care arrangements.

Rep. Tamara Grigsby (D-Milwaukee), the bill's author and chairwoman of the Assembly Committee on Children and Families, said lawmakers must act quickly.

"We have a crisis going on with child care in the state of Wisconsin," she said.

The bill Grigsby's committee passed Tuesday would:

• Require criminal background checks on providers every three months. Now, background checks are required once every four years. In July, the Journal Sentinel found nearly 500 child-care providers had criminal records. The Legislative Audit Bureau reported last month on four cases where addresses of in-home child-care providers matched those of registered sex offenders.

• Permanently ban providers from Wisconsin Shares who are convicted of an array of offenses, including crimes against children, homicide, felony sexual assault, armed robbery, welfare fraud and providing false information for a background check. Under current law, many such providers are barred from the program but can get licensed again if they show they've been rehabilitated.

• Require providers to be suspended if charged with a serious crime. They would have their licenses revoked if convicted of the crime.

• Give whistleblower protection to county and state employees who in good faith report what they believe is fraud. The employees would be immune from lawsuits by providers and discipline by their supervisors.

This week, Grigsby criticized Milwaukee County for leaving fraud investigator positions vacant when the county could have used state money to cover the costs. The county failed to spend some $4.3 million since 2004 on child-care administration, which includes fraud prevention and investigation.

"Considering that 95% of the fraud in the Wisconsin Shares program has been uncovered in Milwaukee County, details of vacant child care fraud unit positions and unspent money that could have been devoted to combating child care fraud raise grave concerns," Grigsby said in a letter to Milwaukee County Executive Scott Walker.

Grigsby said four of the county's 11 fraud investigator jobs were vacant this year.

She also said the county retained responsibility for investigating child care fraud, contrary to Walker's view.

Walker said the vacancies this year were partly due to the shift of county child-care programs to state oversight. Walker also said the main role of the county fraud unit was to investigate fraud by clients rather than providers.

That remains primarily a state responsibility, he said in a written response to a reporter's questions on the issue. The state could have used the county's excess child care administration money to investigate provider fraud, Walker said.

Grigsby's letter "appears to be another attempt to shift the blame from the state to anyone else," Walker wrote.

Four county fraud investigators are temporarily assigned to supervisory jobs, LisaJo Marks, acting director of health and human services, said Tuesday.

Steve Schultze and Raquel Rutledge of the Journal Sentinel staff contributed to this report from Milwaukee.